The inventory turnover ratio measures:

Question

Quizplus · Accepted Answer

The inventory turnover ratio is calculated by dividing the cost of goods sold by the average inventory balance. This ratio reflects how many times in a given period the company sells its entire inventory. Therefore, the correct answer is C: The times per period the average inventory balance is sold. Option A is incorrect because the inventory turnover ratio does not measure the portion of obsolete inventory. Option B is incorrect because the inventory turnover ratio does not measure how many times the company purchases inventory during the current reporting period.

The Inventory Turnover Ratio Measures